Telkonet to restate earnings dating back to 2009

Wauwatosa-based Telkonet Inc. said Tuesday it will have to restate its financial reports going back to 2009.

The small firm - sales in 2010 totaled $11.3 million - determined that it was $815,000 short on money set aside for potential sales-tax bills, interest and penalties.

Because of the shortfall, the company will need to restate its annual financials for 2009 and 2010, and the first three quarterly financial reports of last year.

The task of calculating the extent of its sales-tax exposure and determining the need to restate its financials "has been arduous and lengthy, due to the complexities involved with the incorporating statutes of all 50 states," Telkonet said in a news release.

Telkonet supplies energy management systems to places such as hotels, dormitories and military barracks. The technology employs occupancy sensors to reduce heating or air-conditioning use when rooms are empty.

The systems are installed in more than 200,000 locations, according to Telkonet's website. The firm also provides hotels with high-speed Internet access, serving more than 4.2 million users a month.

But Telkonet, which moved its headquarters from Germantown, Md., to Wauwatosa about two years ago, has had its challenges. Operating losses in 2010 and before prompted its auditing firm, in a report last March, to question Telkonet's continued viability.

The sales-tax shortfall may not be Telkonet's only cause for restatements. In its announcement Tuesday, the company said that as management worked to close the books on 2011, it discovered "certain potential adjustments related to previously reported financial statements and is in the process of completing such analysis."

Telkonet trades over the counter under the symbol TKOI. The firm's shares closed Tuesday at 20 cents, down 3 cents.

About Rick Romell

Rick Romell covers general business news and retail. He has won or been runner-up for national awards for business feature writing, coverage of Milwaukee's economic future, the personal toll exacted by job loss, the impact of Chinese manufacturing on Wisconsin, and the discovery of chronic wasting disease in the state's deer herd.